The Income-Tax Appellate Tribunal ( ITAT ) has held that a taxpayer can invest capital gains for the second or third time towards the same ‘new’ house property . Tax benefits cannot be denied on this ground, provided the cost of the new house is within capital gains that have arisen to the taxpayer. ITAT also held that as the new property was under construction, it cannot be counted towards the number of houses already owned by the taxpayer. Various provisions of the Income-Tax (I-T) Act grant a tax benefit, where long-term capital gains (LTCGs) arising out of a sale of certain assets are invested in acquiring a new house property. To the extent of investment in the new property, the taxable component of LTCGs is reduced, which results in lower I-T outgo. But if the taxpayer owns more than one house, other than the ‘new’ residential property, on the date of transfer of the original assets, the I-T benefit is not available. It is not uncommon for taxpayers to sell more...
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